Earnings Call: NYTCo's Robinson: Our Ad Supported Model Works Best; Still Exploring 'Payment Models'
This story was written by David Kaplan.
Anticipating the questions about the NYTCo's survival during a time of crisis for newspapers, President and CEO Janet Robinson sought to offer assurances that the company is at least getting a grip on costs. By the end of the year, the company should be able to realize $300 million in operating cost reductions. After ticking off activities in Q1 designed to act on those savingssuch as the $225 million sale-leaseback of its headquarters and the $250 million cash infusion from Mexican billionaire Carlos Slimshe the turned to the dismal revenue picture outlined in the Q1 report.
Chatter on pay models: Robinson also wanted to address what she said was the "chatter" about the NYTCo's ability to charge for content. "Twice, in the NYT's history, we experimented with charging for online contentfirst in 1996 and in 2006 with Times Select. We recently looked at the business models of more than 30 different online organizations to examine what was the most effective in generating online revenues. What we have learned is that the advertising model we have used at the NYTimes.com has generated more revenue the vast majority of other organizations, including some that are much larger. Our goal is to add substantial new revenue from our users, without materially affecting our leading display advertising business. As the ad market placeparticularly in printchanges, we continue to explore different payment models and other approaches to generate revenues from our online content. We believe the rate of the decline in Q2 will be the same as the previous quarter." More after the jump
Globe's fate: On a few occasions during the call, Robinson said she would not delve into the fate of the Boston Globe too deeply. But she did offer express some hope that the NYTCo (NYSE: NYT) and the unions would continue to talk about cost savings that could improve the paper's chance of survival. "The Globe's management has been very proactive for a number of years on cost reductions," Robinson said. "They're working very hard on circulation profitability and moved in regard to combining printing facilities. All of those moves are going top help the paper in terms of its financial position."
About.com: a canary in the coalmine: Martin Nisenholtz, SVP for Digital Operations, took a question about ad trends related the NYTCo's guide site About.com, which was once one of its fastest growing properties but has been declining over the past year. The company has been hoping to shift from display to a cost-per-click model. Asked about the performance of CPC with respect to About.com, Nisenholtz said described the gains as "fairly modest." He added: "The pricing levels in the auctions are holding up and volume has been increasing just a little bit. The numbers are trending as they previously have. With regard to Q2, we have seen relatively anemic display advertising results at About. That started fairly early in 2008. About was a canary in a coalmine with respect to internet advertising. It started to show trends that other websites began to show in the fourth quarter. The good news is that NYTimes.com has not been subject to those trends. CPC is accountable and should remain fairly strong in a recession."
Advertisers are saving dollars in H109: Marketers aretelling the NYTCo that they are saving dollars in the first half of the year and will do possibly more in after the summer "if they're able to," Robinson said at the end of the call. The caveat is, as Robinson added, is that the ad marketand the economy in generalremains too unpredictable to tell.
By David Kaplan